Boulder officials may rent office space downtown to make up for a shortage of space in city buildings.

Office space downtown can cost as much as 50 percent more than similar office space in east Boulder, commercial real estate brokers said. City officials said they're aware of the cost issues, but being downtown -- near other city workers -- creates efficiencies for employees and makes things easier on the public, as well.

"Even though it would be cheaper, I don't like to see staff moved out of downtown," Boulder Mayor Matt Appelbaum said.

On Tuesday night, the Boulder City Council will discuss municipal space needs and the possibility of renting space downtown.

City staff members now work out of several buildings downtown, all of which have constraints on adding more space. The Municipal Building, 1777 Broadway, cannot be renovated easily to house more workers because so much of the building is dedicated to public meeting space. The New Britain and Park Central buildings at Arapahoe Avenue and Broadway, east of the main library, are located in the flood plain of Boulder Creek. They cannot be substantially improved under city code, and they may be decommissioned in the near future, meaning the city doesn't want to put a lot of money into renovations.

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As part of the Civic Area planning process, city officials are looking at long-term space needs. However, any new construction is probably five years in the future, according to a City Council memo on space needs.

"Staff has been looking at leasing nearby downtown office space as a temporary solution while a long range plan is being developed," the memo said.

Staff members working on municipal utility plans already lease space in an office building on 14th Street. The plans under consideration call for relocating one of the major users from the Municipal Building, relocating one of the core functions from the New Britain building or relocating a smaller subgroup from the Municipal Building, the memo said.

The City Attorney's Office has been identified as a likely candidate for moving off-site because it does not provide direct customer service to the public, the memo said. The City Attorney's Office has said it cannot hire an additional staff attorney because there is nowhere for that person to work. According to the memo, city officials believe that would allow other offices to be moved around in a way that would accommodate short-term space needs.

"This plan should free up enough space to allow for modest growth and improve employee productivity," the memo said.

City officials said renting additional office space downtown could cost between $150,000 and $300,000 a year, at a rate of $26 to $38 a square foot. The space used by the Energy Future team costs $22 a square foot with no additional fees.

Becky Callan Gamble, president of Boulder-based real estate firm Dean Callan and Co., said the vacancy rate downtown is between 5 and 6 percent right now.

"For many, many companies, it's just a very desirable location to be, for the obvious amenities," she said. "High-tech companies especially like to be downtown. They like to be near the other tech companies so that they can have those synergies."

Base rents are usually about 30 percent less in east Boulder, and additional expenses such as taxes, insurance and management fees can be 50 percent less, Gamble said.

Andrew Freeman, managing broker at Freeman Myre, another commercial real estate firm, said rents in the former Daily Camera building at 11th and Pearl streets are running $35 a square foot before any additional costs are added.

"The market is really strong downtown," he said. "Rental rates are at historic highs."

Boulder spokesman Patrick Von Keyserling said city officials are open to looking elsewhere for rental space if it proves too expensive, but they believe staff members will work more efficiently if they are near one another in a central location.

Freeman said rents in east Boulder run between $15 and $20 a square foot, and sometimes there are no additional fees.

"This is just my opinion, but if the city is looking at renting space downtown or in east Boulder, they should rent in east Boulder," Freeman said. "Downtown, they're going to be paying similar rates to tech companies who are making a lot of money and can afford it."

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